Hurricane Harvey poised to deliver gut punch to growing oil hub

HOUSTON (Reuters) - The first major hurricane in 18 years to take aim at Corpus Christi, Texas, could deliver a gut punch to a city booming from chemicals and energy exports driven by the shale revolution.

Hurricane Harvey was approaching the city on Friday with winds of up to 130 miles an hour (215 kph), the National Weather Service said. The city of 325,000 people has not had a direct hit by a major storm since Hurricane Celia in 1970.

The National Weather Service said the storm surge around the city, which is less than 7 feet (2.13 m) above sea level, could be between 6 feet and 13 feet (1.83 meters and 4 meters)when Hurricane Harvey arrives.

The port is better “prepared for these events now,” said Sean Strawbridge, chief operating officer of the Port of Corpus Christi, the nation’s largest handler of crude oil exports. There are emergency bunks and food stores, backup generators and improved communications, he said.

The south Texas city, long home to several major refineries and ports, is in the midst of an investment boom bringing billions of dollars in pipeline and chemical projects. Its workforce is up more than 6 percent in the last six years, to 197,000 people, according to U.S. Bureau of Labor statistics.

A gas pump is covered with an out of service message as fuel ran out ahead of Hurricane Harvey's arrival near the Texas coastal area, in Houston, Texas, U.S., August 25, 2017. REUTERS/Ernest Scheyder

“Corpus Christi has benefited from the shale boom and is likely to continue benefiting in the future,” said Michael Plante, a senior research economist for the Federal Reserve Bank of Dallas.

Its port operations are benefiting from rising oil exports since the U.S. lifted its decades old ban on exporting domestic crude nearly two years ago. Through the first six months this year, the port has exported an average 217,000 barrels per day(bpd), according to cargo tracking service Kpler. Its exports hit a record of 279,000 bpd in April, Kpler said.

Pipeline and fuel storage companies, including Magellan Midstream Partners (MMP.N), Buckeye Partners (BPL.N), and NuStar Energy (NS.N), have suspended operations ahead of the storm, while four refineries in the region have shut production.

“The ‘hangover’ from the storm could be longer than people think,” said Sandy Fielden, director of commodities and energy research at Morningstar in Austin, Texas.

The last storm to hit Corpus directly was Celia, a lesser, category 3 with 125 mile per hour winds. It left 11 dead and caused $500 million in damages.

Corpus Christi’s proximity to major energy producing regions means its importance is unlikely to diminish. Pipeline operators Enterprise Products Partners (EPD.N) and Kinder Morgan (KMI.N) are considering new natural gas pipelines from the Permian Basin shale field to Corpus Christi in the next few years.

NAmerico Partners and Permico Energia LLC, also have proposed natural gas and natural gas liquids lines along the same route. Exxon Mobil (XOM.N) and Saudi Basic Industries Corp (SABIC) are planning an about $10 billion petrochemical complex near Corpus Christi capable of producing 1.8 million tonnes of ethylene per year.